Commercial borrowing by small and medium-sized businesses in Canada rose slightly in the first quarter. Canadian Business Lending Index rose to 206 in the first quarter from 204 in the fourth quarter. The positive in this number is the quarterly increase and the lower decreases. Business lending was trending down on a Q over Q basis. Now the Q over Q is up.

According to William Phelan, president of PayNet, which tracks commercial borrowing by millions of small and medium-sized businesses in Canada shows this growth is due to more discretionary money in the hands of consumers as a result of the lower energy prices such as gasoline to fuel their cars and natural gas to heat homes.

PayNet’s CFLA Business Credit Delinquency Trends Index captured this weakness in the first quarter, with the index jumping to 2.73% in March, and the average delinquency rising nearly 0.6%-points between the end of the fourth quarter of 2014 and the end of the last quarter.

Transition is evident in the loan delinquencies which jumped up sharply. Much of the investment in 2012 through 2013, when borrowing increased a total of 47%, appears excessive now in light of higher energy production and lower price of a barrel of oil as a result of frackers. These investments are causing a flare up in loan delinquencies.

The Canadian Business Lending Index (CBLI) measures the volume of new commercial loans and leases to small businesses indexed so that January 2005 equals 100. Because small businesses generally respond to changes in economic conditions more rapidly than larger businesses do, the CBLI serves as a leading indicator of the economy.
 
The CFLA Business Credit Delinquency (BCD) Trends reflect the percentage of Canadian businesses that are more than 30 days past due or 90 days past due with Canadian finance companies. The BCD Trends measure small business financial stress and provide an early warning of future insolvency.